How To Transition From Paying Down Debt To ... - My Debt Relief Plan

Becoming debt free is priority number 1. The best way to approach debt elimination is to aggressively cut expenditures and then direct that excess income toward paying down debts as quickly as possible, starting with the highest interest rate debt first (credit card debt) and working your way down to lower interest rate debt (mortgage and school loans).

The formula for becoming debt free is not overly complicated. It?s the discipline and focus that is difficult. Most people want to maintain the same standard of living, while simultaneously paying off debt. That is not impossible, but it will take much longer than if a person simply cuts off all needless expenditures, thereby decreasing one?s standard of living in the near-term, and then funneling all of that extra cash flow each month toward paying down debt.

Now, once a significant portion of debt is paid off, a person is once again faced with a similar challenge in terms of standard of living. A wise person cuts his or her standard of living in order to pay down debt and gain a strong financial footing. But what about once all debts are paid off? Then what?

At this point a person is faced with two choices :

1. Increase standard of living

2. Direct extra cash flow into assets

Most Americans, unfortunately, opt for number 1. The new smart tv, the new car, the nice vacation, the new clothes, etc etc. As tempting as this can be, a wise financial manager will opt for number 2. This is how the rich get richer. In the early stages of the financial journey, a person tends to work for money. Once debts are paid off, however, opportunities become available and now a person has the ability to have his money work for him, and this is made possible by investing in assets.

How To Invest In Assets

This is possibly the most important financial decision a person can make. What types of assets should you invest in? Real estate? The stock market? Small businesses?

The simple answer to this question is that there is no single right answer. The best decision is to conduct a few months of research and determine what interests you. Then, commit to master that area of financial investment. For example, if you enjoy real estate and buying properties, then it makes sense to build a small portfolio of investment properties over a period of time. If you enjoy financial markets and tracking macroeconomic events, it makes sense to build a stock market investment strategy and begin building an investment portfolio.

The real goal is to simply become your own investment manager. Remember, you are not in a hurry to do this. Take your time, find out where your real interest lies, and then get educated.

One of fastest growing investment arenas is the foreign exchange market. As the stock market continues to move in wildly volatile patterns in this post-2008 economy, currency trading is growing dramatically as investors seek to reduce stock market exposure and take cash positions in foreign currencies. For more information on fx trading, you can visit one of the many online foreign exchange brokers to access free educational material and practice trading accounts. For more about Forex, click here.

Source: http://www.mydebtreliefplan.com/2012/07/how-to-transition-from-paying-down-debt.html

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